TL;DR: Basically the US FED (central bank) is doing this to:
Provide liquidity (ie more cash) into the bond markets and ETFs
This is done to stabalise the market and allow trades to happen in the stock market (which is made up of buyers and sellers)
Also referred to 'Buyer of last resort' the US government
This is AKA: Quantitative Easing (QE) in a sexier name
Quantitative easing, also known as large-scale asset purchases, is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to add money directly into the economy.
Imagine this simple food analogy:
You are in a hawker center food court
All the stalls are aggressively selling their fish, meat, veg and rice
However there are not enough people buying
Hence the price goes down
Then suddenly the Hawker landlord starts going to the Cai Png stall to buy up multiple dishes at once
This ensures that the Hawker center can still function and prices don't drop too much
Read more: Full article
The Federal Reserve on Monday announced a fresh round of stimulus designed to calm markets and buffer the hit to the economy from the coronavirus pandemic. Among other steps, the Fed said it would buy exchange-traded funds that track the corporate bond market, a first for the U.S. central bank.
“This will provide much-needed liquidity to the bond market and to ETFs,” said Todd Rosenbluth, head of ETF and mutual fund research at CFRA.
Financial markets have been pummeled over the past few weeks. The global oil market has been collapsing just as a virulent pandemic sweeps the world, sapping resources and shutting down economies. Investors across all kinds of markets are racing to “sell everything.”
TL;DR: Basically the US FED (central bank) is doing this to:
Provide liquidity (ie more cash) into the bond markets and ETFs
This is done to stabalise the market and allow trades to happen in the stock market (which is made up of buyers and sellers)
Also referred to 'Buyer of last resort' the US government
This is AKA: Quantitative Easing (QE) in a sexier name
Quantitative easing, also known as large-scale asset purchases, is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to add money directly into the economy.
Imagine this simple food analogy:
You are in a hawker center food court
All the stalls are aggressively selling their fish, meat, veg and rice
However there are not enough people buying
Hence the price goes down
Then suddenly the Hawker landlord starts going to the Cai Png stall to buy up multiple dishes at once
This ensures that the Hawker center can still function and prices don't drop too much
Read more: Full article
The Federal Reserve on Monday announced a fresh round of stimulus designed to calm markets and buffer the hit to the economy from the coronavirus pandemic. Among other steps, the Fed said it would buy exchange-traded funds that track the corporate bond market, a first for the U.S. central bank.
“This will provide much-needed liquidity to the bond market and to ETFs,” said Todd Rosenbluth, head of ETF and mutual fund research at CFRA.
Financial markets have been pummeled over the past few weeks. The global oil market has been collapsing just as a virulent pandemic sweeps the world, sapping resources and shutting down economies. Investors across all kinds of markets are racing to “sell everything.”